Harvard’s State of the Nation’s Housing 2008

House_decline

Huge run down of all things Housing via Harvard’s Joint Center for Housing Studies. It is a comprehensive look at housing markets, demographic drivers, homeownership, rental housing and housing "challenges."

The slump is "shaping up to be the worst in a generation" still hasn’t run its full course, according to JCHS.

Marketwatch goes a step further, and ties the shaky job market to the

-Last year marked an acceleration of home-sale declines, propelled by falling home prices and the credit crunch. The pain in the housing market spread to the rest of the economy by the beginning of this year, as the drop in home building, turmoil in the credit and stock markets and the effect of falling home prices on borrowing and consumer spending contributed to the slowdown.

-Real home equity (adjusted for inflation) fell 6.5% to $9.6 trillion in 2007. And home-price declines as well as a slowdown in home-equity withdrawals conspired to trim one-half of a percentage point from real consumer spending and more than one-third of a percentage point from total economic growth.

-During 2003 to 2005, housing prices surged so far ahead of incomes that by 2006, the number of households (both renters and owners) paying more than half their income on housing rose to 17.7 million, or 15.8% of all households. Today, lenders are requiring larger down payments and higher credit scores, squeezing many would-be buyers out of owning a home — even though prices have fallen.

-More proof of the changing lending landscape: Subprime loans fell to 3.1% of originations in the fourth quarter of 2007, from 20% in 2005 and 2006. Interest-only and payment-option loans fell to 10.7% of originations in 2007, from 19.3% in 2006.

There is a tonne of good stuff in all of the reports, and you can easily spend hours sifting through the charts, graphs and tables . . .

Glut_house

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Hat tip Real Time Economics

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Sources:
The State of the Nation’s Housing 2008
(PDF)
http://www.jchs.harvard.edu/publications/markets/son2008/son2008.pdf

Harvard’s Grim Housing Report
Real Time Economics, June 23, 2008, 10:59 am
http://blogs.wsj.com/economics/2008/06/23/harvards-grim-housing-report/

Shaky job market threatens housing recovery   
Amy Hoak
MarketWatch, June 23, 2008
http://tinyurl.com/6ezqko

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What's been said:

Discussions found on the web:
  1. HCF commented on Jun 23

    I would hesitate to call a bottom soon… Why? Even though the year over year numbers are abysmal, one piece of data stood out to me, as pointed out by Diana Olick’s Realty Check Blog on CNBC: Price increases since 2000….
    Miami: +109%
    LA: +107%
    etc. etc.

    While she and Chip Case (of Case-Shiller fame) argue this as a plus side to the housing market, I look on the flip side: The housing market can drop A LOT more before it would be considered UNDER-VALUED. Right now, all we can really say that real estate is slightly less over valued than a year ot two ago. Just my two cents…

  2. wunsacon commented on Jun 23

    How can Americans afford houses priced above the prices in 2000 while a broad swath of high-paying jobs goes overseas?

    Remember Perot’s Giant Sucking Sound? For years, my contention has been that the dot-com boom and then the real-estate boom both drowned it out. But, though masked, the sound was there. (Detroit certainly heard it.) Without another boom, what will post-NAFTA housing demand look like without other effects masking it? In real terms, houses might correct below 2000 levels. We might have a *long* way to go.

    Not saying it will. Just saying it’s possible.

    As the housing stock growth decreases, I suspect the average American’s living arrangements will appear more like those abroad: fewer McMansion developments, more “flats”, and more generations living together.

  3. Tim commented on Jun 23

    Why does the third column cover 2 years while the first 2 columns are only for a year. Is it because the YoY numbers are starting to level off? That is some pretty skewed data and charting.

  4. Rich Shinnick commented on Jun 23

    Anybody here finding it hard to be a buy and hold investor these days?

    Oh wait, if you are here (on Barry’s blog) that sort of answers my question BUT here is a question for you: if today I buy a basket of JPM, BAC, C, WFC, GS, LEH-in 5 years I will

    a) Regret it
    b) Look like a genius
    c) Be standing in a soup line

    So, where is the bottom, no really….

    Just a random thought.

  5. larster commented on Jun 23

    How can anyone call a bottom when the construction industry is flat on it’s back, the financial industry is shedding jobs right and left, the airlines are technically bankrupt, and the auto companies are on a sales glide down to hellish levels? Iam not a gloom and doomer but it is going to take a miracle to turn this around swiftly, particularly when part of the giant sucking sound is $160 billion per year going to Iraq and Afghanistan. Just like investing where the winners are the ones consistently hitting singles and doubles, wed will turn this economy around by hitting singles and doubles; not home runs. This will take time.

  6. Mike commented on Jun 23

    Did anyone notice that the National Association of Realtors provided funding for this report? wonder if anyone there will actually read it. Probably not since it conflicts with most of what they say….

  7. CaptiousNut commented on Jun 23

    Any prediction on the housing market is fundamentally one on long term Treasuries. Why do only 1% of “experts” grasp this?

    If I knew where yields were heading, I’d bet on the bond market – not JPM, BAC, or real estate.

  8. mhm commented on Jun 23

    Rich, I know that was a rhetorical question, but the answer is “will regret it” at some point and that is the bottom.

  9. drey commented on Jun 24

    “Anybody here finding it hard to be a buy and hold investor these days?”

    Depends what you’re holding, Rich. A couple hundred shares of SKF can give a guy a warm tingly feeling all over…

  10. Rich Shinnick commented on Jun 24

    Drey,

    Coincidentally, sold my couple hundred shares of SKF today, that is what sparked the question…

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